In 2021, Malta became the European Union’s first member state to be placed on the Financial Action Task Force (FATF) grey list, due to concerns over money laundering and a lack of rules to prevent financial crimes from taking place. It joined a raft of other states with less than glowing reputations, such as Uganda, Syria, Pakistan and Yemen.
But fast forward to summer 2022, and Malta found itself lifted from the purgatory of the financial services sector. The FATF said it welcomed the significant progress made by the country in tightening its AML/CFT regime and in meeting the commitments laid out in its action plan.
In particular, the body noted improvements in detecting inaccurate company ownership information, obtaining accurate beneficial ownership information and pursuing tax-based money laundering cases through the use of financial intelligence.
This is all very well and good, but what does it mean for Malta’s iGaming industry?
Malta launched its iGaming licensing regime in 2002, two years before it ascended to the EU. Since then, it has grown to become one of the world’s leading iGaming jurisdictions, home to some of the biggest names in the business.
A small country, it more than made up for its stature in terms of businesses geared to support iGaming operators, a welcoming business environment and a packed calendar of gaming events every year.
Even during the years of the Covid-19 pandemic between 2020-2021, the gaming sector ploughed money into the economy to the tune of 12% of GDP.
But the greylisting was a big problem for Malta. Over the year, it languished on the list, a number of big names packed up and left, while many potential licensees opted for safer options like Kahnawake and the Isle of Man. In February 2022, Media and Games Invest SE, with a turnover of €221m ($214m), moved its registration from Malta to Sweden, citing concerns over its ranking. Other fintech companies and entities in related industries also fled the island over the last 12 months due to the situation.
With the curse being lifted, Malta is hopeful it will regain its crown in the iGaming world once again, but this may not happen overnight.
Following removal from the grey list, various Malta-based stakeholders reacted. Some praised it as a demonstration of the Government’s commitment to upholding the law and said it would come back stronger than ever before. However, others were more measured and cautioned that now Malta has to make sure it remains in the white, and doesn’t slip back to its old ways.
But for some, the damage has already been done. Some players in the local game said Malta would have to work very hard to regain its reputation and build upon its previous successes. While they hope to see an increase in new investors to the island, it is clear that many will be cautious about future instability and the risk of being placed on the grey list once again. Many will simply go elsewhere to jurisdictions that have never been on the grey list, while others may decide to risk it.
Back in May, before the greylisting was lifted, stakeholders were already worrying about over-regulation in the industry and the impact this could have on their operations. Over-regulation would lead to the country’s uncompetitiveness, which would, in turn, see a drop in licensees and future applicants. Time will tell how this all plays out for the Maltese sector.
Fast Offshore has been working in the iGaming sector for 25 years and has vast experience in Costa Rica, Kahnawake, Curacao, Malta and the Isle of Man. We can assist with all matters, including licensing, company incorporation, compliance, payments and ongoing maintenance. If you want to start an iGaming company but are not sure of where to do it, why not contact us to find out more?
